China is seeking to expand its influence in South Asia at India’s expense, Indian Prime Minister Manmohan Singh warned in rare public criticism of his country’s main rival for regional resources and geopolitical clout.

Singh’s comments follow repeated diplomatic sparring between the two Asian powers over the last two years, reflecting growing friction over their disputed borders and roles as emerging global powers despite bilateral trade that has grown 30-fold since 2000.

“China would like to have a foothold in South Asia and we have to reflect on this reality," Singh was quoted as saying by The Times of India on Tuesday. “We have to be aware of this."

“There is a new assertiveness among the Chinese. It is difficult to tell which way it will go. So it’s important to be prepared."

The newspaper also quoted Singh as saying that China could use India’s “soft underbelly" of Kashmir, a region disputed with Pakistan, “to keep India in low level equilibrium."

But it also quoted Singh as saying he believed the world was large enough for India and China to “cooperate and compete".

An official at the prime minister’s office, on condition of anonymity, said the newspaper quotes were correct.

Answering reporters’ questions about Singh’s remarks, Chinese foreign ministry spokeswoman Jiang Yu gave an upbeat view of ties that did not suggest Beijing is spoiling for a fight.

“Development of bilateral relations benefits both countries and region as a whole," Jiang said in Beijing.

Analysts said that despite decades of mistrust, the current spat is unlikely to snowball if past diplomatic sparring is anything to go by. China is India’s biggest trade partner.

Growing Tension

While trade has grown 30-fold since 2000, the tension highlights how economic ties alone may not be enough to resolve the two countries growing friction.

“Mutual confidence between the countries is far from sufficient," said Zhao Gancheng, an expert on Sino-Indian relations in Beijing. “That problem is rising in importance."

China defeated India in a 1962 war, but they still spar over their disputed 3,500 km (2,170 mile) border and the presence of exiled Tibetan spiritual leader, the Dalai Lama, in India. China’s support for India’s arch-enemy Pakistan, which backs separatists in disputed Kashmir and also claims the region in full, has not helped defuse tensions.

“His (Singh’s) understanding is China has crossed the red lines that affect India’s core sovereignty concerns," said Srikanth Kondapalli, chairman of the Centre for East Asian Studies at New Delhi’s Jawaharlal Nehru University.“

“There are green lines such as trade but there are concerns there as well, such as the (trade) imbalance and anti-dumping concerns. There is also a realisation in India that you have to make your displeasure more explicit to be taken seriously."

In 2009, India was China’s tenth biggest trade partner, and bilateral trade was worth $43.4 billion, according to Chinese customs figures. For India, China is its biggest trade partner.

Last month, India criticised China’s denial of a visa to an Indian general from Kashmir. New Delhi later said it was also worried by China’s influence in the Indian Ocean.

China has invested in the ports in Pakistan and Sri Lanka, as well as the mining and energy sectors in Myanmar, irking India as it seeks to protect shipping lanes in a region that feeds 80% of China’s and 65% of India’s oil needs.

Last year, the Indian media reported on Chinese incursions along the border, incidents the India government shrugged off.